• Currently, the City’s Land Use and Development Code, VMC Title 20, does not expressly allow short-term rentals (STRs) in any zoning district, and therefore they are prohibited.
• Within the last decade, the popularity of STRs via web-based platforms has increased dramatically throughout the country as a substitute for (or preferred option to) traditional lodging like hotel rooms.
• A review of data analytics indicated that over 400 non-permitted STRs are in use in the City of Vancouver, but due to the proprietary nature of locational data used by the platforms, tracking these and following up to complaints is extremely difficult.
• At the Council’s request, City staff developed a multi-year outreach and monitoring program to determine the current short-term rental market in Vancouver and gather community feedback on challenges and opportunities associated with this activity.
• Over the last two years, the project team has worked with the Council, Planning Commission (PC) and broader community to develop STR regulations that strike a balance between community housing needs and housing affordability with individual property rights, as well as creating a permit process to enable tracking of STRs and for individual complaints to be responded to.
• At an October 2, 2023, update to Council under City Manager Communications, staff presented PC's recommendation regarding the proposed STR code amendments. At that time, Council provided additional feedback on the draft STR regulations endorsed by the PC, including: limiting the total number of short term rental permits that can be issued within the City; prohibiting future units developed under forthcoming new Accessory Dwelling Unit (ADU) and Middle Housing regulations needed to comply with state laws from being used as STRs; and a desire to advance some middle housing regulation in advance of the Comprehensive Plan Update process to address current housing challenges.
• In response, staff have amended the proposal to include a maximum of 870 STRs that can be permitted in the City (approximately one percent of total housing stock). In addition, staff have separately initiated a process to increase allowable ADUs in compliance with state law and in advance of the Comprehensive Plan Update via an interim control ordinance that will simultaneously prohibit ADUs from being used as STRs.

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Background

At a September 20th, 2021 workshop, staff presented information on the Housing Code Changes project, a set of proposed code changes to support more diverse housing types that included new regulations for short-term rentals (STRs). In their deliberations, Council directed staff to develop and execute a separate, stand-alone process focusing on STRs and the unique issues and opportunities associated with this activity.

Following this direction, staff enlisted the services of Host Compliance, a platform of Granicus to assist with gathering current data on the existing STR market in Vancouver. In February of 2022, the City began reaching out to owners of known STRs to advise them of the existing restrictions and to invite their participation in a broader community engagement process around STRs. Between March and June 2022, the project team led an extensive outreach campaign consisting of two community wide surveys and several small group conversations.

Development of code language to regulate short-term rentals began in October of 2022 and was finalized in February 2023.  In addition to the Planning Commission workshops, staff presented at two City Council workshops, on June 27, 2022, and April 3rd, 2023.

On April 11, 2023, the Planning Commission recommended approval of the proposed short-term regulations and permit process based on the findings outlined in VMC 20.285.070.

Existing Conditions

A short-term rental is defined as a residential property or portion of a residential property (room, guesthouse, Accessory Dwelling Units, etc.) that is available to rent for stays of less than 30 days. This includes rentals available on websites such as Airbnb and VRBO. Within the last decade, the popularity of STRs has increased dramatically as a substitute for (or preferred option to) traditional lodging like hotel rooms across many jurisdictions in the county. This increase has not been as dramatic in Vancouver as other cities, but the number of STRs here has risen over time.

Currently, the City’s Land Use and Development Code, VMC Title 20, is silent on and thus does not allow STRs in residential zones except as expressly authorized under the bed-and-breakfast provisions of VMC 20.830. A bed-and-breakfast also provides an alternative form of lodging for visitors who prefer a residential setting. The Development Code considers bed-and-breakfast establishments as Commercial and Transient Lodging, which includes uses such as hotels, motels, and homeless shelters where stays are typically less than 30 days. Bed-and-breakfast establishments, which envision a host in residence with guests and the provision of food in conjunction with lodging, don’t capture the typical Airbnb-type STR arrangement that has emerged in recent years. Staff believes creating separate short-term rental regulations is required to properly govern this type of land use.

The overview of the short-term rental landscape as of November1, 2023, includes:

• There are approximately 425 STR units in the City of Vancouver.
• Short-term rentals represent roughly 0.5% of Vancouver’s approximately 87,000 residential units.
• 85% of STRs are in single family homes, 14% in multi-family homes, with the remaining 1% undetermined.
• 87% of STRs rent out an entire home, rather than a room or portion of an occupied home.
• 30% of STRs are 3-bedroom rentals, 30% are 2-bedroom rentals, 24% are 1-bedroom rentals, 6% are 5 or more-bedroom rentals, and 10% are unknown.
• The median nightly rental rate is $118.
• Geographically, STRs are spread throughout the City with a modest concentration in downtown and west side neighborhoods.
• Approximately 75% of STRs are advertised through Airbnb with the remaining quarter listed through Expedia/VRBO and other platforms.

The City continues to monitor the number of short-term rental units through the online platform Host Compliance, provided by the project consultant Granicus. Host Compliance is an industry leader in STR monitoring and compliance and was able to provide a comprehensive list of all current STRs located in the City, including parcel and owner information. In addition, Host Compliance now provides the City with ongoing monthly updates on the current number of rentals in the City, including location, property type, room type, average duration of stay and rental platform(s) used.

Outreach

Since March 2022, 85 community members have also shared their thoughts about STRs through an online comment box on the City’s BeHeard Vancouver website. The responses received are both in favor and against of regulations STRs.

The City also conducted small group conversations with housing advocates, short-term rental hosts and operators, hotel and tourism industry professionals, small business owners, real estate agents, and housing advocates including Evergreen Habitat for Humanity, Council for the Homeless, and Fourth Plain Forward. The housing advocates noted that STRs pose a real threat by removing housing stock from the market. While the City may not have thousands of units, any unit being taken of the market for a vacation home instead of a permanent residence is exacerbating the affordable housing crisis. The hotel and tourism industry felt STRs should be required to have the same inspections and regulations as hotels, including requirements related to the federal Occupational Safety and Health Administration (OSHA), fire life and safety inspections, electrical, plumbing, ADA, and the state tourism office. Participants expressed concern that allowing too many STRs in any given neighborhood could have a lasting impact on the community, citing the potential impacts of a transition from a fully residential neighborhood to one that has businesses operating in it. Short-term rental hosts offered why they chose to operate a STR, including many who said it provided supplemental income that is used to pay for mortgages, provide retirement income, pay medical bills and other monthly expenses, and in general increases disposable income. Hosts shared that they feel STRs bring a value, asset, and benefit to the City & local economy.

Council and Planning Commission Direction

City Council directed staff to develop changes to VMC Title 20 Land Use and Development Regulations that would allow STRs as a permitted use in residential zones subject to a defined permit process and appropriate standards. Council also asked staff take a closer look at implementing regulations that pay specific attention to:

On March 14, 2023, staff presented a draft of potential regulations for STRs to the Planning Commission as a workshop item.  Planning Commission was supportive of the proposed regulations. The Planning Commission asked staff to consider the following items:

• Requiring STR permits to be renewed after 24 months
• Ongoing compliance monitoring to ensure all STRs have COV STR permit
• Define code compliance process for STR violations
• Consider requiring inspections for all new STR permit applicants
• Create an operator packet for all new STR applications

In response, staff will be monitoring and reporting permit findings at 12 and 24 months and requiring permit renewal at 24 months.  The data collected via the city permit and provided by Host Compliance will be used to monitor all STRs and ensure they are operating legally. The short-term rental application now includes the process for responding to code violations. As of this report, staff is not recommending inspecting all new permitted STRs, as the influx of new permits would be administratively burdensome, and we do not inspect other existing residential units regularly. The proposed regulations do maintain the ability of the City to inspect any STR at the discretion of the City’s Building Official and Fire Marshall, and there are examples from other jurisdictions that can inform how and when we may pursue STR inspections. And lastly, staff has created and updated the operator packet in alignment with discussion at the last Planning Commission workshop on this topic (Attachments D-G). Additions to the operator packet include more specificity around fire & life safety items including proper address identification, fire protection and safety equipment.

City Council also provided additional direction at a workshop on April 3, 2023, which included the following:

•  Return to Council with updates on the process after one year and again at 24     months.
•  Establish goals for the STR program during 24-month period.
• Get clarity from STR platforms what recourse the City has for STRs that are operating illegally in any way, in addition to local remedies like revoking permits and code enforcement.
• Explore if permit fees could apply to the affordable housing fund or housing production.
• Clarify that a new permit application and fee are required each time a unit has a new owner/operator, even if it has previously been operated as an STR prior to transfer/sale of the property.

Regulations

Following feedback from City Council and Planning Commission as well as community feedback and comparative jurisdiction research, staff has prepared draft code language to regulate short-term rentals (Attachments C and D). The regulations are a response to the level of activity currently seen in the short-term rental market in Vancouver and the intent of the regulation is to strike a balance between community housing needs with individual property rights and the financial stability that additional revenue generated from STRs can provide. As another means to preserve the city’s available housing stock staff is proposing to place a cap on the total number of STRs not to exceed 870 permits or 1% of the city’s total housing stock ( approximately 87,000 units).

Staff also recognizes the need to ensure new housing types mandated under recent state laws HB 1110 and HB 1337 are not used as STRs. Staff will address the new housing requirements in the following ways:

• Starting in early 2024, initiate a process to put in place an interim control ordinance that implements HB 1337 Accessory Dwelling Units in advance of Title 20 changes that will occur as part of the Comprehensive Plan Update. As part of this, prohibit ADUs from being used as STRs going forward.
• Establish new regulations for HB 1110 Middle Housing and refine/make permanent regulations implementing HB 1337 Accessory Dwelling Units, including prohibiting units developed under these regulations from being used as STRs.

The proposed STR regulations would allow short-term rentals in all residential and commercial zones, and in two industrial zones (OCI and ECX) as a limited use that must follow regulations in new code section 20.835. STRs must register with the Washington State Department of Revenue. STRs must follow all relevant short-term rental provisions listed in the Revised Code of Washington, Chapter 64.37 and Consumer Safety measures listed in 67.37.030.

Short-term rentals must obtain a City of Vancouver business license. The regulations create a short-term rental permit with a one-time $250 fee. Staff is proposing to review the performance of the permitting system after a 24-month monitoring period and require permit renewal as part of the transition from the pilot program to a permanent regulatory structure. In order to obtain a permit an applicant would need to provide an affidavit showing proof of mailing a letter of notification to property owners abutting and adjacent to the proposed short-term rental, copy of liability insurance for the rental property, and a completed permit application including the signed acknowledgement by the owner stating that the short-term rental will comply with the required standards in 20.835.050 VMC and allowing the City to inspect the premises in accordance with VMC 17.08. A STR permit would expire if property ownership changes.

Please refer to Attachment B and C for the full proposed code language. In addition to the development of regulations, staff has created an Operator Packet that would provide detailed information to STR operators, including an updated FAQ, good neighbor fact sheet, short-term rental permit application and neighbor notification letter (see Attachments D-G). The FAQ is meant to serve as a resource to educate STR operators and the broader public on the City’s policies and how to handle issues. The good neighbor fact sheet is a resource for short-term rental operators, hosts, and guests, outlining the regulations around noise, parking, fire safety, garbage, and overall guest responsibilities. It also includes information about an online fire & life safety training opportunity our Fire Department is in the process of creating.  The permit application requires short-term rentals to comply with all required standards in 20.835.050 VMC, include their City of Vancouver business license number and short-term permit number in all advertising, and register any short-term rental business with the City. The notification letter is meant to serve as a template letter that short-term rental operators can use to notify neighbors of their operations. The letter provides a way for neighbors to notify the owner/operator directly if/when issues occur, as a first option for resolution.

Implementation

If adopted, staff recommends that the regulations be “tested” for a 24-month pilot period to assess their effectiveness and determine what changes may be needed. During this time STR counts, including the 1% cap, will be collected through the City permitting process in addition to the monthly report received from the City’s consultant Host Compliance. If the proposed regulations or modified regulations are adopted, staff would return to Council within a year to provide an update, and again at the 24-month mark to determine if the permitting process, development standards or code compliance process need any refinements. As directed by Council, during the pilot period staff will explore options for potentially adding an affordable housing fee to the STR permit to help mitigate impacts to housing availability, if there needs to be an annual or biannual renewal fee for a short-term rental permit to ensure cost-recovery and if applicable determine what the renewal fee would be, and if any additional restrictions should be added to the operation of short-term rentals.

Following adoption all current short-term rentals operating in the City of Vancouver will be notified of these regulations and be directed to follow the permitting process. Due to the initial surge of applications that are anticipated after the ordinance goes into effect, we are proposing allowing applicants a 30-day grace period to come into compliance.

Program Goals

In order to gauge the effectiveness of the short-term rental program during the 24-month pilot program we have established a set of goals including but not limited to:

• Limiting the total number of STRs to not exceed 870 total units- equivalent to 1% of the City’s total housing stock at the time of adoption- in an effort to preserve available housing for long term housing needs.
• Ongoing compliance monitoring to ensure all STRs are compliant with required regulations.
• Ongoing monitoring of impacts to long-term rental market including impacts to housing affordability.
• Minimize public safety risks and possible noise and trash problems without creating additional work for the local police department and code enforcement personnel.
• Monitor the responsiveness of code compliance cases.

Ongoing stakeholder outreach to determine program effectiveness and inform future refinements.